First came the announcement that Google is poised to acquire Andrew Mason's Groupon for between $5.3 and $6 billion, the search giant's biggest acquisition to date. Now comes the news that Amazon.com has made a $175 million investment in Groupon's largest competitor, Washington, DC-based LivingSocial, which was on our 30 Under 30 list this year. At the same time, Lightspeed Ventures, an initial investor, put an additional $8 million into the company. AOL's Steve Case is also a LivingSocial investor. Get ready for a battle for the hearts and minds of social coupon-loving consumers everywhere as these two young companies duke it out for market share with the help of their selected Goliaths.
A spokesperson for the company says that LivingSocial will 'use this investment to maintain a steady drumbeat of worldwide market launches and overall business growth while continuing to serve more than 10 million subscribers across the U.S., Canada, UK, Ireland and Australia in more than 120 markets.' LivingSocial, which currently books on average $1 million a day, predicts over $500 million in revenue in 2011. 'To be the biggest player in the local commerce space there is no one better to work with than Amazon,' said Tim O'Shaughnessy, CEO of LivingSocial. 'As the social shopping space continues to heat up, LivingSocial is committed to staying focused on providing the high level of quality that consumers and merchants have come to expect when working with us.' LivingSocial expanded its business by acquiring adventure excursion company Urban Escapes, also a 30 Under 30 company, in October.
Over at Mashable, Laruen Indvik suggests that a Groupon acquisition by Google may actually benefit Living Social if the deal – still not a done deal as of this writing – doesn't culminate in a smooth integration of the spunky start-up. 'It certainly wouldn't be the first startup that has gone to Google to die,' she says. But if the Groupon/Google deal does happen, can a full acquisition of Living Social by Amazon be far behind? Then both Groupon and LivingSocial will face similar challenges. And consumers will surely see the face of the social coupon industry change radically. What about Groupon founder Andrew Mason and LivingSocial founder Tim O'Shaughnessy? Maybe they'll be able to ditch their desks like Mint.com's Aaron Patzer did! Stay tuned.
DONNA FENN | Inc.com Contributing Editor
Donna Fenn is the author of Upstarts! How GenY Entrepreneurs Are Rocking the World of Business and 8 Ways You Can Profit From Their Success, an exploration of the ways Gen Y is changing the entrepreneurial landscape.